May 24, 2006 Chatsworth, CA, and Wuhan, China -- Luminent, a wholly-owned subsidiary of MRV Communications has agreed to acquire HG Genuine Opto, a subsidiary of Huagong Tech. HG Genuine Opto is the second largest fiber-optic transceiver manufacturer based wholly in China.
Per the agreement, Luminent will acquire HG Genuine for $40 million in cash and 15% of Luminent's common stock to be outstanding at the time the acquisition closes. The closing is subject to the satisfaction of various conditions, including completion of due diligence and obtaining necessary governmental and third-party approvals and consents in the U.S. and China as well as other customary closing conditions. Assuming the transaction closes as expected, MRV will own 85% and HG Tech will own 15% of the resulting company. In the event that certain conditions following the closing are not met, HG Tech has, under the terms of the signed agreement, the right to sell its interest in Luminent back to MRV for $45 million in cash or stock.
"We believe the technology, cost structure, and increasingly global customer base of the combined company will provide a complete solution for metro and access transceivers," contends Near Margalit, CEO of Luminent. "The combined entity should have an average monthly module run rate surpassing 200,000 units. HG Genuine provides a distinctive combination of technical expertise, manufacturing capacity, and cost structure that complements Luminent's rapid growth and expansion in fast growing metro and fiber-to- the-premises markets," he adds. "The anticipated annual revenues of the combined company are expected to solidly place Luminent among the top fiber-optic component suppliers in the world."
With more than 500 employees and 100 engineers, HG Genuine has developed technology and manufacturing expertise in semiconductor laser and photodiode chips, analog cable TV (CATV) transmitters, 3G transmitters, and digital transceivers for datacom and telecom markets. HG Genuine supplies top-tier Chinese systems manufacturers, including Huawei, Huawei-3Com, and ZTE, and could contribute an additional 20% to 25% in revenue to Luminent's revenue base. HG Genuine has over 110,000 square feet of manufacturing space.